Comdisco sells disaster recovery unit to SunGard

SunGard Data Systems Inc. has acquired Comdisco Inc.'s disaster recovery business for US$825 million in cash.

"SunGard's acquisition of Comdisco's business continuity assets ensures the presence of a financially solid, hardware-neutral vendor, focused on the best interests of all customers," said James L. Mann, chairman and CEO of SunGard, in a statement issued by both companies. "Importantly, customers will benefit from a greater geographic presence with more facilities, platforms, network capacity and technical personnel, with increased operating efficiencies."

In the statement, Norm Blake, chairman and CEO of Comdisco, said the sale was in the best interests of all Comdisco stakeholders.

"The transaction not only brings the highest and best value for the business, but will assure the delivery of the highest level of service to our customers, while creating excellent opportunities for our employees. We are actively at work with SunGard to ensure a seamless transition," Mann said.

Earlier Thursday, the U.S. Circuit Court of Appeals for the District of Columbia paved the way for the sale by denying a motion by the U.S. Department of Justice (DOJ) to delay the purchase pending its appeal of yesterday's ruling by the U.S. District Court for the District of Columbia. That court had ruled in SunGard's favor in the antitrust lawsuit brought by the DOJ to block the transaction.

The DOJ claimed the sale would result in higher prices and lower-quality services for users because SunGard, Comdisco and IBM are now the three major vendors of disaster-recovery services. Although the Justice Department argued that combining two of vendors would stifle competition, U.S. District Court Judge Ellen Segal Huvelle refused to stop the sale.

Before the sale was completed, the DOJ had filed an appeal with the U.S. Court of Appeals for the District of Columbia. It wasn't immediately clear on what grounds that appeal is based, and the DOJ couldn't be reached for comment.

The Appeals Court has not yet scheduled a date to hear oral arguments in the appeal, according to a court spokeswoman.

Larry Gross, SunGard's legal counsel, said the sale was allowed to proceed despite the DOJ appeal.

Last week, a bankruptcy court judge approved the sale of the disaster recovery unit to SunGard.

The bidding war began July 16, when Comdisco filed for bankruptcy and agreed to sell the business unit to Hewlett-Packard Co. for $610 million, subject to higher or otherwise better offers in a court-authorized auction process. After the auction Oct. 11, Comdisco selected SunGard's $825 million bid as the highest and otherwise best offer.

At that point, the DOJ filed an antitrust lawsuit to stop the sale. After that, Comdisco changed its mind again and on Oct. 31 said it was selling the disaster recovery business unit to HP for $750 million, a sale it said had been approved by Comdisco's board of directors and a committee of creditors.

SunGard then filed a motion in bankruptcy court, challenging Comdisco's decision because it said HP's bid didn't comply with the court's bidding procedure. (A committee of Comdisco's shareholders had supported the sale of the disaster recovery unit to SunGard.) HP had no comment about the bankruptcy court's decision.

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